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USA Tissue Tracker: December Operating Rates Fall Despite Higher Shipments

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RISI, Boston, Mass., USA, has released U.S. tissue stats for December 2016. Converted product shipments and parent roll production increased y/y while operating rates dropped m/m to 90.0%, below the 10-yr. average for December.

Converted product shipments 2.1% higher y/y (+2.0% in 2016). Total At-Home (consumer) shipments of converted tissue products increased 1.5% y/y and 1.6% in 2016. This strength was attributable to higher volumes in bathroom tissue (up 1.3% y/y) and towel (+2.3% y/y), partially offset by facial (flat y/y). Total Away-from-Home (AfH) shipments of converted tissue products also showed strength, increasing 3.5% y/y (+2.8% in 2016). For AfH, bathroom tissue volumes grew 2.9% y/y, towels rose 3.8% y/y, and napkin volumes were up 2.5% y/y.

Parent roll production rose 2.7% y/y (+2.0% in 2016). Parent roll production was 717,000 tons in December, up 2.7% y/y (+2.0% m/m). Domestic parent roll consumption was 739,000 tons, 3.9% higher y/y (+3.1% in 2016) and up 2.4% m/m.

Operating rates lower than the 10-year December average. Operating rates edged lower m/m to 90.0% from 91.2% in December (90.2% last year). This compares unfavorably with the 10-year December average of 92.1%. Mill capacity was up 3.0% y/y (+3.4% m/m).

Net U.S. tissue imports surged 21.7% y/y (though represent only ~5% of consumption). Net U.S. tissue imports increased 21.7% y/y (+39.7% YTD) in November (latest customs data). U.S. exports of converted tissue products were up 8.0% y/y in November, while Canadian volumes rose 7.9% y/y.

Parent roll prices lower m/m for virgin and recycled grades. High-quality virgin parent rolls showed slight weakness in December at $1,367/ton, down 0.6% from November (+1.6% y/y). Recycled parent roll prices also declined slightly, with the high-quality grade at $1,118/ton, down 0.2% m/m (+0.3% y/y).

Three TAD tissue PMs announced and some year-end closures. Irving Consumer Products announced the purchase of a new TAD tissue-making machine from Valmet with an expected delivery in 2018 (RISI estimates capacity to be about 70,000 tpy). First Quality Tissue also announced two new TAD machines as a part of its expansion initiatives. One machine will be constructed in Anderson, S.C. and is expected to begin production in the second half of 2018, while the other will be in Lock Haven, Pa. and is projected to start in the first half of 2019. These two machines will add ~145,000 tons of production capacity. These announcements were partially offset by Clearwater Paper’s announced closure of its Oklahoma City converting facility and two tissue machines in Neenah, Wis., which removes 32,000 tons of production capacity beginning Dec. 31, 2016.

RBC Dominion Securities Inc., Paul C. Quinn (Analyst), (604) 257-7048.
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